Verizon today said the foundation for 5G is being built now, but many of the most transformational aspects of the technology such as mobile edge computing, dynamic spectrum sharing, devices, and refarmed low-band spectrum to support 5G won’t arrive until 2020 or later.

“5G has been a huge focus for us,” Verizon CEO Hans Vestberg said on the company's latest earnings call. With its standards-based mobile 5G network now available in select neighborhoods of Chicago and Minneapolis, and plans to reach 30 cities by the end of the year, the operator will “continue to deploy infrastructure in more cities, prioritizing cities that have made it easy to build there,” he said.

“Our initial launches are performing as expected,” and more features and enhancements will become available through software, Vestberg said. “We’re now two years into the implementation of our next-generation intelligent edge network, which we expect to be largely completed by 2021. We’re realizing significant efficiencies and cost savings from our network transformation initiatives.”

Capital spending during the first quarter of 2019 was down 6.5% year-over-year to $4.3 billion, and the company is maintaining a full-year capex guidance range of between $17 billion and $18 billion. “Our capital expenditures continue to support the growth in data and video traffic on our industry leading 4G LTE network, the launch and continued buildout of our 5G ultra wideband network, the upgrade to our intelligent edge network, and significant fiber deployment,” CFO Matthew Ellis said during the earnings call.

“We have maintained our disciplined approach to capital allocation, focused on investing in our networks,” and “we’re well positioned to deliver on all of our capital allocation goals in the years ahead,” Vestberg said. “Our strategy lays the foundation for the future through investment in our intelligent edge network, enabling efficiencies throughout the core infrastructure and delivering flexibility to meet customer requirements at the network edge.”

Verizon’s early 5G deployments, which rely exclusively on millimeter wave (mmWave) spectrum, has it facing questions about the propagation limits of the high-frequency spectrum and how it plans to augment network performance with low- or mid-band spectrum. These early mobile 5G networks suffer from limited coverage and signals that drop within hundreds of feet of a base station.

“It’s meeting our expectations but we have much more to come out from it in terms of speed, throughput, coverage, and all that,” Vesterberg said. “We all need to remind ourselves this is not a coverage spectrum,” he said, adding that the operator will deploy mmWave spectrum equipment “as far as it’s economically sustainable, of course.”

Vestberg described coverage ranges as “very good” and said “the throughput and speeds are enormous.” Dynamic spectrum sharing, which “will come into play next year,” will change the outlook and over time Verizon plans to use low- and mid-band spectrum to complement mmWave, he explained. Dynamic spectrum sharing is equipment that will allow carriers to dynamically allocate spectrum resources between their 5G and legacy network technologies depending on demand.

“Verizon is more closely tied to millimeter wave spectrum than any other operator, not only in the U.S., but arguably in the world,” analysts at Moffett Nathanson wrote in a new report. The operator has taken every opportunity to double down on mmWave, putting it at the “center of not only their fixed wireless broadband plans, but even more controversially, their mobility plans as well,” the firm wrote.

“Millimeter wave spectrum is suited for a supporting, not a starring, role,” the analysts added. “The challenges posed by millimeter wave spectrum have increased the perceived urgency for Verizon to acquire mid-band spectrum.” Moffett Nathanson also called into question the likelihood of Verizon acquiring mid-band spectrum soon, adding that none of the viable options are available now. “Much of the talk of mid-band spectrum has the flavor of wishful thinking.”

When pressed on this issue during the earnings call, Vestberg declined to say which spectrum bands it will bring to 5G, but he did explain that efforts to refarm 3G spectrum for its burgeoning 5G network will be completed by 2020. “I see a lot of technology innovation,” and “the engineering team feels good about it,” he said.

Verizon banked $5.16 billion in net income on earnings of $32.12 billion during the quarter. Those numbers marked a 1.1% increase in revenues and a 10.6% jump in net income compared with the same quarter last year. Verizon ended the quarter with 139,400 employees and $113.7 billion in debt, $103.3 billion of which is unsecured.